Baseball professional Juan Soto has signed a new record contract, the 26-year-old will receive $765 million over the next 15 years with the New York Mets, possibly even more. The question arises, especially in Europe: Why is there so much money in this sport?
It is no longer a secret that the international sports business now pays salaries that are in astronomical levels. Often one record follows the next. Higher, faster, further – and above all one thing: always better paid. That’s the motto.
Now a contract marks the new height of salary madness – not in soccer, basketball or American football, but in a sport that is far less popular in Europe.
Record contract for baseball star Juan Soto
The New York Mets, one of the top teams in the North American Major League Baseball (MLB), will be paying a lot for the services of star player Juan Soto in the future.
The 26-year-old will be moving from the New York Yankees to local rivals for the next 15 years. The Mets are putting together a salary package of $765 million, which could potentially grow to up to $805 million. It is the largest contract ever for an individual athlete. Soto is the measure of all things.
The big question that arises, especially in Europe, in view of this mega contract: Why is there so much money in the MLB? Or to put it another way: Why do some baseball players earn so well?
One of the main reasons: Even though baseball is one of the lesser-known sports in Europe compared to other US sports, it is particularly popular in North America and East Asia. Many MLB players come from Japan, the most famous of whom is Shohei Ohtani. Just last year, the 30-year-old was signed by the Los Angeles Dodgers to a $700 million contract. A milestone. Until Soto and the Mets came along.
MLB is one of the financially strongest professional leagues in the world
The great popularity of the sport in several parts of the world, including Latin America, ensures that the MLB is one of the financially strongest professional leagues. Dem “Sports Business Journal” According to the report, the league generated revenue of around $11.6 billion last year, an increase of $1 billion compared to 2022.
In a league comparison, the MLB is among the big players. Only in the NFL, the North American football league, does more money flow overall. Numbers that make it clear: There is definitely money in the highest baseball league.
Advertising plays a significant financial role in the high income of the league and its teams. An example: Thanks to Ohtani, Japanese companies in particular are interested in advertising in the Dodgers environment. The player abroad quickly becomes the figurehead of an entire country.
Mets owner is one of the richest people in the world
Another reason for so much money in the MLB is obvious: the clubs are usually owned by extremely wealthy owners. For many, the baseball club is a kind of toy into which a lot of money is invested. This can be seen quite impressively, for example, in the already mentioned Mets with owner Steven Cohen.
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According to Forbes magazine Cohen is currently ranked 95th in the ranking of the richest people in the world. The hedge fund manager’s current fortune is estimated at $21.3 billion. In November 2020, the ardent New York Mets supporter bought his favorite club. For $2.4 billion.
Each MLB team plays at least 162 games per season
What is different in comparison to some other baseball leagues and therefore provides one or two additional financial injections: Nationally, the individual clubs can negotiate separately with television companies regarding TV marketing. So it can happen that, for example, the Dodgers games are on a completely different channel than the Mets games. An unusual approach – at least from a European perspective.
In any case, there is a lot of music – or rather money – involved when it comes to baseball broadcasts on TV. In the USA, five different providers show live baseball, and the broadcast is worth billions of dollars to all of them.
What is also rather unusual for Europeans who are particularly interested in football: the sheer number of games within one season in the MLB. Each team plays at least 162 games in a season, half of which are logically in their home stadium. The income from tickets and other proceeds on a match day – for example from merchandising and catering – should not be ignored.
There is no salary cap in the MLB
What also sets the MLB apart from many of the other major US sports leagues is a lack of a salary cap. The introduction of such a system has so far failed due to the strong players’ union, the Major League Baseball Players Association (MLBPA). Limiting the salary is of course not at all in the interests of the players.
How powerful the MLBPA is has already been made clear in the past: When the previous collective agreement expired, the club owners suggested introducing a salary cap for reasons that they understood. What followed was a months-long strike in the MLB, with no play from August 1994 to April 1995.
This lack of a salary cap means that there is sometimes real competition between clubs for star players. This was also the case with Soto recently. His current club, the Yankees, offered the 26-year-old $760 million over 16 years. Not enough for the baseball professional, who then joined the Mets.
In theory, the rich owners of the clubs can spend as much money on players as they want. There is a theoretical limit (this season it is $237 million), if it is exceeded, a penalty, the so-called “luxury tax,” must be paid. For most owners of an MLB team, however, it is a penalty that they accept without hesitation – if the desired player then plays on their own team. Mets owner Steve Cohen is unlikely to be bothered by the “luxury tax” as one of the richest people on the planet.
Lavish signing bonus for Soto
He makes a lot of moves for Soto, the boy wonder from the Dominican Republic. He offered $765 million for just 15 years – and threw two more “treats” on the table. Soto receives 75 million immediately; If he waives the option to exit the contract after five years, his annual salary will increase from an average of $51 million to $55 million. That makes a total of 805 million.
Despite all of the reasons mentioned above, it must be noted: the mega contract for Soto is a new milestone in contracts in professional sports and will shape future negotiations with top stars. Even in the USA, the motherland of baseball and the land of seemingly unlimited opportunities, you don’t see contracts like this every day. And that’s saying something.
Sources used
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